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Lexicon Pharmaceuticals, Inc.  (NASDAQ:LXRX)
Q4 2018 Earnings Conference Call
March 13, 2019, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

See all our earnings call transcripts.

Prepared Remarks:

Operator

Welcome to the Lexicon Pharmaceuticals' Fourth Quarter and Full Year 2018 Financial Results and Business Update Conference Call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we will hold a brief question-and-answer session. As a reminder, this call is being recorded today, March 13th, 2019.

I will now turn the call over to Dr. Kimberly Lee, Head of Investor Relations and Corporate Strategy. Please go ahead.

Kimberly Lee -- Head of Investor Relations and Corporate Strategy

Thanks, Maria. Good morning, and welcome to the Lexicon Pharmaceuticals' Fourth Quarter and Full Year 2018 Financial Results and Business Update Conference Call. Joining me on today's call are Lonnel Coats, Lexicon's President and Chief Executive Officer; Alex Santini, Executive Vice President and Chief Commercial Officer; Dr. Pablo Lapuerta, Executive Vice President and Chief Medical Officer; Dr. Praveen Tyle, Executive Vice President of Research and Development; and Jeff Wade, Executive Vice President of Corporate and Administrative Affairs and Chief Financial Officer.

After our formal remarks, we will open the call up for Q&A. Earlier today, Lexicon issued a press release announcing our financial results for the fourth quarter and full year 2018, which is available on our website at www.lexpharma.com and through our SEC filings.

A webcast of this call along with the slide presentation will be accessible in the Investor Relations section of our website. During this call, we will review the information provided in the release, provide an update on our clinical programs and then use the remainder of our time to answer your questions.

Before we begin, let me remind you that we will be making forward-looking statements, including statements relating to the safety and efficacy and the therapeutic and commercial potential of XERMELO, sotagliflozin and our other drugs candidates.

These statements may include characterizations of the commercial performance of XERMELO, the expected timing and outcome of regulatory review of applications for approval of sotagliflozin, the expected timing and results of clinical trials of sotagliflozin, telotristat ethyl and our other drug candidates and the market opportunity for those programs. This call may also contain forward-looking statements relating to Lexicon's growth and future operating results, discovery and development of other drug candidates, strategic alliances and intellectual property as well as other matters that are not historical facts or information.

Various risks may cause Lexicon's actual results to differ materially from those expressed or implied in such forward-looking statements. These risks include uncertainties related to the success of our commercialization efforts for XERMELO, the regulatory review of applications for the approval of sotagliflozin; the timing and results of clinical trials and preclinical studies of sotagliflozin, telotristat ethyl and our other drug candidates; our dependence upon strategic alliances and other third-party relationships; our ability to obtain patent protection for our discoveries; limitations imposed by patents owned or controlled by third party; and the requirements of substantial funding to conduct our research, development and commercialization activities.

For a list and a description of the risks and uncertainties that we face, please see the reports we have filed with the Securities and Exchange Commission.

I would now like to turn the call over to our President and CEO, Lonnel Coats.

Lonnel Coats -- President and Chief Executive Officer

Thank you, Kim. Good morning everyone and thanks for joining us on the call. 2018 was marked by some meaningful milestones for Lexicon. We saw a continued growth of XERMELO net sales, made significant progress toward advancing sotagliflozin to market, further developed our pipeline while effectively managing our resources and spending.

I will now elaborate on some of these key achievements. I will then turn the call over to Alex, Pablo and Jeff, for updates on our XERMELO business, pipeline developments and financial results respectively. Starting with XERMELO, we achieved US net sales of $7.3 million in the fourth quarter of 2018 and $25 million for the full year of 2018.

We saw a continued growth in our patient and prescriber base in the fourth quarter of 2018 and we expect continued growth in 2019. Our collaborator, Ipsen continues to launch XERMELO outside the US with more countries expected to come online this year.

Our other priority last year was to work with Sanofi to submit the regulatory filings for sotagliflozin in type 1 diabetes in the US and in Europe, which was accomplished. The FDA set a PDUFA date of March 22nd, 2019, and an advisory committee meeting was held in January 2019, which Pablo will talk more about shortly.

In Europe, I'm pleased to announce that sotagliflozin recently received a positive CHMP Opinion in Type 1 diabetes, which represents a significant step forward for the European Type 1 diabetes community. We look forward to the expected adoption of CHMP positive opinion by the European Commission and the EU approval in the second quarter.

In type 2 diabetes in 2018, Sanofi continued to enroll patients in 11 Phase 3 studies to support global regulatory filings, completing enrollment in the nine course studies designed to support an initial approval and also initiated two Phase 3 studies in China.

We continue to believe that sotagliflozin and SGLT1 mechanism offers the opportunity for differentiation based in part on the ability to benefit type 2 patients who have either stage 3 or stage 4 chronic kidney disease and for whom SGLT2 inhibitors provide declining efficacy or are contraindicated. The first of the Phase 3 studies is expected to read out in the second quarter of this year with data from the remainder of the core studies expected throughout this year.

We are eligible to receive meaningful milestone payments from Sanofi associated with a positive data readouts for certain Phase 3 studies and type 2 diabetes this year. Sanofi remains on track to submit regulatory filings for type 2 diabetes in the US and in Europe in early 2020.

We continue to make disciplined investments of R&D including clinical exploring the potential expansion of telotristat ethyl, therapeutic utility based on preclinical and other data demonstrating the role of serotonin and tryptophan hydroxylase in biliary tract cancer. We expect initial cohort data from the Phase 2 biliary tract cancer study in 2020.

For LX9211, we continue to make meaningful progress in the clinical development of this novel investigational compound for neuropathic pain. We anticipate data from our ongoing Phase 1b study in the second half of this year and we are diligently planning for proof of concept studies.

We have prudently managed our cash and ended 2018 with a strong balance sheet. We're expecting to transition the positive cash flow in our XERMELO carcinoid syndrome diarrhea business over the next twelve months.

Taking into account expected growth in net sales relative to commercialization and field (ph) medical costs for the brand.

At the same time, we wrapped up the major phase 3 investments of the past several years and are nearing some substantial potential milestones for sotagliflozin in Type 1 diabetes and Type 2 diabetes. Overall, we believe we're well capitalized to execute on our business strategy both with respect to commercialization and continuing advancement of our R&D pipeline.

2019 will be an important year for us as we execute on our strategy to position the Company for future growth and to build long term sustainable value for our shareholders. Our priorities remain growing XERMELO franchise, establishing our leadership position in Type 1 diabetes and advancing our clinical programs.

With that, I'll turn the call over to Alex to discuss our commercial performance. Alex?

Alexander A. Santini -- Executive Vice President and Chief Commercial Officer

Thanks, Lonnel. Good morning, everyone. For the full year 2018, we achieved U.S. XERMELO net sales of $25 million, up 66% over the prior year. Total U.S. net sales for XERMELO in the fourth quarter of 2018 were $7.3 million, up 33% over the prior year quarter and 16% from the third quarter of 2018.

As Lonnel spoke to earlier, we saw a continued increase in our patient and prescriber base. Total paid prescriptions for the fourth quarter was 1,386, up approximately 13% quarter-over-quarter and 65% compared to the prior year quarter.

There were 144 new paid patient starts in the fourth quarter, the overall discontinuation rate remains in line with our expectations. We continue to see increased number of patient restarts at the drug discontinuation and we anticipate this trend to continue.

The compliance rate remains around 80%. We continue to achieve very good access and reimbursement for XERMELO. The payer mix is increasingly weighted toward commercial payers followed by Medicare, which together account for a very high percentage of the business.

Medicaid and other government payers collectively account for a very small percentage. Outside the US, Ipsen continues to obtain approvals for XERMELO in other territories. In 2018, XERMELO received national reimbursement approval in Scotland, Denmark, Sweden, Greece, Luxembourg, Northern Ireland, Wales, Germany, Belgium and the Netherlands.

We expect other European countries and pricing approvals to come online throughout this year, but continue to anticipate that the trajectory of the XERMELO launch in Europe will be a gradual one.

In 2019, we expect total U.S. XERMELO net sales to grow in the range of 20% or greater year-over-year. We will continue to activate a broader prescriber base. Our experienced team continues to work to ensure that patients with carcinoid syndrome diarrhea have the opportunity to benefit from XERMELO. There remains significant opportunity to increase demand.

I will now turn the call over to Pablo, who will provide a pipeline update.

Pablo Lapuerta -- Executive Vice President and Chief Medical Officer

Thanks, Alex. Let's start with our most advanced program, sotagliflozin in Type 1 diabetes. I'm pleased to announce that on February 28th, the EMA Committee for Medicinal Products for Human Use adopted a positive opinion recommending regulatory approval of sotagliflozin for use as an adjunct to insulin therapy to improve glycemic control and as for adults with type 1 diabetes and a body mass index of at least 27 who have failed to achieve adequate glycemic control despite optimal insulin therapy.

We are very pleased with this result. This positive opinion is a testament to our and Sanofi's dedication to this community. We look forward to the adoption of the CHMP positive opinion by the European Commission and the EU approval next quarter.

In the US, we and Sanofi met with the FDA Advisory Committee on January 17th to discuss the new drug application or NDA for sotagliflozin in Type 1 diabetes. The committee voted 8 to 8 on the question of whether the overall benefits outweigh the risks and support approval of sotagliflozin as an adjunct to insulin to improve glycemic control in adults with Type 1 diabetes.

We and Sanofi are working closely with the FDA as they complete their review of the NDA. We will not provide more detail on this matter given the stage of the regulatory process. We continue to expect a regulatory decision in the US by March 22nd.

In Type 2 diabetes, Sanofi is running a robust Phase 3 clinical development program centered on the opportunity for differentiation in patients with renal impairment.

Diabetic patients with moderate to severe chronic kidney disease remain a significant segment that comprises between 16% and 20% of the Type 2 population. Since the declining renal function is a hallmark of Type 2 diabetes, demonstrating benefits in this patient population could make sotagliflozin an attractive option for all Type 2 diabetes patients.

Evidence continues to build that SGLT2 inhibitors are becoming treatment of choice for patients with Type 2 diabetes based on benefits on A1c weight loss and blood pressure, as well as improvements in cardiovascular outcomes and renal protection.

We are seeing organizations such as the American Diabetes Association, the European Association for the Study of Diabetes and the American College of Cardiology supporting the use of SGLT2 inhibitors in patients with Type 2 diabetes.

We look forward to initial data readouts from our core Phase 3 studies for sotagliflozin this year starting in the second quarter. We anticipate that Sanofi will submit regulatory filings for Type 2 diabetes in the U.S and in Europe in early 2020.

We look forward to potentially adding a second marketed drug to our portfolio. In addition to sotagliflozin, we continue to explore telotristat ethyl's therapeutic utility outside of carcinoid syndrome diarrhea. We're excited to advance the drug into clinical development in biliary tract cancer.

In this quarter, we have initiated a Phase 2 study of telotristat ethyl and gemcitabine plus cisplatin in treatment naive patients with cholangiocarcinoma.

Last, but not least, we are very excited about our LX9211 program in neuropathic pain. Recent Phase 1a data were consistent with the drug's preclinical profile and showed a favorable pharmacokinetics profile that supports once daily dosing.

We look forward to advancing LX9211 into proof of concept studies in neuropathic pain indications following completion of our ongoing Phase 1b study in healthy volunteers. We are committed to discovering, developing and commercializing therapies with the greatest value proposition for patients.

We've made good progress and we look forward to updating you in the future. Now, I'd like to turn the call over to Jeff who will provide financial highlights.

Jeffrey L. Wade -- Executive Vice President, Corporate and Administrative Affairs and Chief Financial Officer

Thank you, Pablo. This morning, I will discuss key aspects of our fourth quarter and full year 2018 financials and we'll introduce our financial guidance for 2019. More financial details can be found in our 10-K, which will be filed shortly.

Now please refer to Slide 13 of our presentation. As indicated in our press release today, fourth quarter 2018 revenues totaled $17.1 million, down from $34 million for the prior year period, primarily due to lower revenues recognized under collaboration and license agreements.

Full year 2018 revenues decreased to $63.2 million from $91.7 million, primarily due to timing of revenues recognized from clinical trial activities under our alliance with Sanofi and reduced milestone payments from Ipsen, partially offset by an increase in net product revenue. Net product revenues for full-year of 2018 included $25 million from net sales of XERMELO in the U.S. and $1.6 million from the sale of bulk tablets to Ipsen.

Cost of sales related to sales of XERMELO was $0.6 million and $0.5 million, respectively for the fourth quarter of 2018 and 2017. Full-year 2018 and 2017 cost of sales was $2.5 million and $1.9 million, respectively. Research and development expenses for the fourth quarter of 2018 decreased to $12.3 million from $46.3 million for the corresponding period in 2017, primarily due to decreases in our external clinical development cost related to sotagliflozin. Full-year 2018 R&D expenses decreased to $100.2 million from $152.2 million, primarily due to lower external clinical development costs relating to sotagliflozin and professional and consulting fees.

During the financial close for fiscal year 2018, we determined that we had over accrued $19 million of clinical development costs relating to sotagliflozin in our R&D expenses over the last several years. The 2017 R&D expenses set forth in today's press release have been restated to reflect these adjustments.

Selling, general and administrative expenses for the fourth quarter of 2018 were $16.6 million compared to $16.1 million for the same period in 2017. Full year 2018 SG&A expenses decreased to $63.8 million from $66.1 million, primarily due to lower salaries and benefits and decreased marketing costs.

During 2017, Lexicon recognized an $8.7 million income tax benefit from the intangible assets relating to XERMELO were reclassified from indefinite-lived to finite-lived assets. The income tax benefit was remeasured to $12.7 million for full year 2017.

During 2018, there was no income tax benefit. Net loss for the fourth quarter of 2018 was $16.8 million, or $0.16 per share, compared to a net loss of $26.6 million, or $0.25 per share, in the corresponding prior year period. For the fourth quarter of 2018, net loss included non-cash, stock-based compensation expense of $2.8 million. For the fourth quarter of 2017, net loss included non-cash, stock-based compensation expense of $2.3 million.

Net loss for the full-year of 2018 was $120.5 million, or $1.14 per share, compared to a net loss of $123.0 million, or $1.17 per share in 2017. For the full-year 2018, net loss included non-cash, stock-based compensation expense of $11.7 million. For the full-year 2017, net loss included non-cash, stock-based compensation expense of $9.5 million.

We ended 2018 with $160.1 million in cash and investments, as compared to $310.8 million as of December 31st, 2017.

We foresee that our current cash position, together with expected revenues will be sufficient to transition to positive cash flow on our XERMELO carcinoid syndrome diarrhea business within the next 12 months based on expected growth in net sales relative to commercialization and field medical cost for the brand.

At the same time, we have wrapped up the major Phase 3 investments of the past several years and are nearing some potential -- substantial potential milestones for sotagliflozin in Type 1 diabetes and Type 2 diabetes. Overall, we believe that we are well-funded to operate our business, including our obligations associated with potential launch of sotagliflozin in Type 1 diabetes while continuing to invest in our early stage pipeline and lifecycle management R&D for telotristat ethyl.

Now let's turn to our financial guidance for 2019. As Alex indicated, we anticipate US XERMELO net sales to grow in the range of 20% or greater year-over-year. We expect collaboration revenues to be driven almost entirely by milestone payments under our alliances with CHMP and Ipsen.

In the latter regard, milestone payments from Ipsen may reach the mid single digit million range in 2019. As to the former, 2019 marks the beginning of a period of slightly more than two years in which we are eligible to receive up to $330 million in development and regulatory milestones, up to $220 million in regulatory milestone payments related to the first commercial sale on regulatory approval of sotagliflozin in type 1 diabetes and type 2 diabetes in the US and in Europe, and up to $110 million in development milestone payments relating to the results of Phase 3 clinical trials of sotagliflozin in type 2 diabetes.

We will also be entitled to receive an additional $100 million in development milestones upon a successful result from one of two outcome studies, which is not expected for a few years yet. Finally, our 2019 revenues will include royalties for which we are not providing specific guidance, encompassing royalties on Ipsen sales and XERMELO outside of the US and subject to approval on Sanofi's sales of sotagliflozin both within and outside the US.

Now let's turn to expected expenses. We anticipate operating expenses inclusive of the US sotagliflozin margin to be in the range of $150 million to $170 million including R&D expenses in a range of $65 million to $75 million and SG&A expenses in the range of $85 million to $95 million.

Non-cash expenses are expected to be approximately $19 million in this total, including $14 million in stock based compensation and $5 million in depreciation and amortization. Exclusive of a US sotagliflozin launch, we would expect our operating expenses to be in the range of $120 million to $140 million including R&D expenses in the range of $60 million to $70 million and SG&A expenses in the range of $60 million to $70 million.

Non-cash expenses are expected to be approximately $17 million of this total, including $12 million in stock based compensation and $5 million in depreciation and amortization. We will provide updates to our financial guidance in subsequent calls based on the resulting regulatory interactions.

I will now turn the call back to Lonnel.

Lonnel Coats -- President and Chief Executive Officer

Thank you, Jeff. We entered 2019 with a well-defined strategy to position the Company for future growth and to build long term sustainable value for shareholders. Our main priorities remain centered around driving a long term value through continued execution on the XERMELO commercialization and making sotagliflozin available as quickly as possible to patients with Type 1 diabetes.

XERMELO remains a significant franchise for us and we're extremely excited to clinically explore the uses of telotristat ethyl in an additional therapeutic indication where the role of serotonin inhibition has shown preclinical promise. In parallel, we and Sanofi continue to work with the FDA as it completes its review of the NDA filing.

In Europe, we look forward to the European Commission's regulatory decision for sotagliflozin in Type 1 diabetes next quarter. In Type 2 diabetes, we anticipate completion of a core Phase 3 studies for sotagliflozin this year, followed by regulatory filings in Europe and in the US in early 2020.

Lastly, we continue to advance our early stage pipeline, product candidates in areas we believe will create long term value for the Company. Underlining each of our development programs is a clear mission to create novel, life changing therapies, fueled by innovative science, talent and our core expertise so that we can make meaningful difference in patients lives.

With that, I will now ask the operator to begin our Q&A session. Please note that, we will not have any further comment on type 1 diabetes regulatory matters. We'll be happy to address other questions.

Questions and Answers:

Operator

Thank you. (Operator Instructions). Our first question comes from the line of Liana Moussatos of Wedbush.

Liana Moussatos -- Wedbush -- Analyst

Thank you for taking my question. You mentioned milestones from type 2 diabetes, Phase 3 trial data, did the first Phase 3 data in Q2 trigger a milestone or do we have to wait for subsequent trials to read out? And can you talk about cash runway and for sotagliflozin, and when does composition of matter IP expire?

Alexander A. Santini -- Executive Vice President and Chief Commercial Officer

Great questions, Liana. Jeff, I'll turn those over to you.

Jeffrey L. Wade -- Executive Vice President, Corporate and Administrative Affairs and Chief Financial Officer

Okay. So we haven't specified which studies the milestones for type 2, but we are looking forward to data that's coming in a relatively tight time-frame starting in second quarter, going through third and fourth quarter.

We believe our cash runway is actually we believe maybe I should approach this in a different way. We believe that we're quite well capitalized for the business that's ahead of us. But in terms of what we have cash on hand, in terms of the fact that our R&D expense is -- will be declining quite significantly in next year, and also because of the fact that we have a number of milestones tied together.

So we feel like we are well capitalized for the business that's ahead of us in pretty much any scenario, and that allows us to continue to execute against our strategy, both in terms of the potential launch of sotagliflozin in type 1 diabetes, in terms of continued execution on XERMELO and in terms of continued investment in our early stage pipeline.

Oh, the patent, sorry, the patent straight (ph) that term runs to the late 2020 before patent term extension we do expect to have patent term extension that will take it out beyond that into 2030s (ph).

Liana Moussatos -- Wedbush -- Analyst

Thank you.

Operator

Our next question comes from line of Yigal Nochomovitz of Citi.

Samantha -- Citi -- Analyst

Hi, this is Samantha (ph) on for Yigal. Thanks for taking our questions. So what are the discussions that came out of the AdCom meeting? Was the potential need for a DKA monitoring study either (ph) (inaudible) approval or potentially post marketing? I'm curious, have you given any thought to that and what the trial look like in just broadly or even in terms of enrollment requirements and point duration, any details you could provide there for your thoughts would be great.

Alexander A. Santini -- Executive Vice President and Chief Commercial Officer

That's a great question. No, we can't provide any details. As we already stated we're actively engaged in the discussions with the regulatory agency. So we're going to abstain from answering questions around that.

Samantha -- Citi -- Analyst

Understandable. Thought I'd ask, all the same. So, since the CHMP issued a positive opinion, is your impression that after speaking with some European physicians that they are less concerned about the DKA risk than some other US colleagues?

Alexander A. Santini -- Executive Vice President and Chief Commercial Officer

Well, I'll give Dr. Lapuerta an opportunity to answer that question.

Pablo Lapuerta -- Executive Vice President and Chief Medical Officer

DKA is the same condition in the US and in Europe and is viewed the same way.

Samantha -- Citi -- Analyst

Okay. And then could you maybe just give a little bit more detail about what the cadence of the data releases we should expect for the T2D trials? Is Sanofi going to give these by press release? Or are they going to be released together multiple trials at the same time or is the first time I'm going to see this data potentially in a medical meeting.

Alexander A. Santini -- Executive Vice President and Chief Commercial Officer

I'll turn it over to Jeff.

Jeffrey L. Wade -- Executive Vice President, Corporate and Administrative Affairs and Chief Financial Officer

So, we expect to announce the level of results that will be required for us to announce from a materiality point of view, but we do expect and we are intending to try to preserve the ability to publish in medical meetings, and so a lot of the details will probably be published at medical meetings. But we'll be able to see as we go through the clinical trials, have we succeeded on those clinical trials as we go along.

Samantha -- Citi -- Analyst

Thanks very much for taking the question.

Alexander A. Santini -- Executive Vice President and Chief Commercial Officer

You bet.

Operator

Our next question comes from line of Jessica Fye of J.P. Morgan.

Jessica Fye -- JP Morgan -- Analyst

Hey guys, good morning. Thanks for taking my questions. I was hoping we could talk a little bit about the commercial preparations you've got under way in anticipation of the launch of sotagliflozin in the US. How much of this is going to be triggered by an eventual approval versus stuff you're getting under way now?

And I was also just hoping if you could help me understand the co-promote a little bit better, like does the $25 million delta in your SG&A guidance with and without sotagliflozin launching reflect 40% of the commercialization cost for Type 1, because the filings talk about having a significant role, but $25 million doesn't seem like all that much in the scheme of big pharma launches.

So any kind of help you could or color you could provide there would be great.

Alexander A. Santini -- Executive Vice President and Chief Commercial Officer

It's a great question. I'll turn it over to Jeff.

Jeffrey L. Wade -- Executive Vice President, Corporate and Administrative Affairs and Chief Financial Officer

So I guess what I'd Jess is, we have been making investments in preparation for commercialization and there will obviously be more expenses associated with the launch, but we have been over the course of 2018 and the first part of 2019, we've been making investments to be prepared.

So I will -- I am somewhat limited in what I can say in terms of the details of the co-promotion arrangement. I would say that the focus of our co-promotion arrangement is on specialists and type 1 diabetes, and so it is somewhat circumscribed as to what we are participating in, but we have continued to make investments and the delta that you see there is what the incremental investment would be that we would expect over the course of this year associated with the launch -- that's our financial obligation associated with that.

Alexander A. Santini -- Executive Vice President and Chief Commercial Officer

Just we do make it to -- to Jeff's point, we made quite a bit of an investment this year in 2018. We've built quite a good infrastructure for ourselves to have the capability to launch into the type 1 community with specialists. We certainly have no intent from a Lexicon point of view to go beyond specialists. And then the second thing I would say is, our collaborator at Sanofi has been well positioned on how it is ready to launch the compound upon approval.

So we're pretty much in a position of readiness, and what you see in the expenses is to Jeff's point is to incremental cost to launch into market at the point of approval.

Jessica Fye -- JP Morgan -- Analyst

Okay. So have you been making key hires like MSOs and lease sales reps in kind of members that you would need to target specialists ahead of time?

Alexander A. Santini -- Executive Vice President and Chief Commercial Officer

Yes. So, we have the core Lexicon for our side, we already have the core. We have the management leadership locked and ready, and it's all a matter of timing now to bring in the next layer to support that core, on the Sanofi side, I think it's more of an allocation, they are already in diabetes, and so, it's a matter of tricking how they are going to allocate their sales force upon approval. So we can be efficiently and quickly deployed into market upon approval.

Jessica Fye -- JP Morgan -- Analyst

Okay. Got it. And then actually, just on that point, how quickly is following an approval do you think this product could be in pharmacies kind of ready to go?

Alexander A. Santini -- Executive Vice President and Chief Commercial Officer

That's a great question. And it's something we've been working with Sanofi on. All that's going to depend on label and what may come out of the discussion with the agency, we'll determine how quickly we'll be able to get into market. But our intent always is to get in as quickly as possible. Lexicon has its standards and Sanofi has its standards, but I think ultimately, both of our objectives is to get in as quickly as possible.

So I can't give you a timeline because our partners have not expressed that publicly, but the objective is to get in as soon as possible.

Jessica Fye -- JP Morgan -- Analyst

Okay. Great. And then just one on Type 2. I think in prepared remarks, you gave a range for the proportion of Type 2 diabetics that have CKD, and I think it was like mid to high teens up to 20%. What proportion of Type 2 patients have stage 3 or stage 4 CKD?

Alexander A. Santini -- Executive Vice President and Chief Commercial Officer

Jeff, I think we disclosed that before.

Jeffrey L. Wade -- Executive Vice President, Corporate and Administrative Affairs and Chief Financial Officer

Yes. It's basically 1% to 2% of stage 4 and the balance of that is stage 3 chronic kidney disease.

Jessica Fye -- JP Morgan -- Analyst

Great. Thank you.

Alexander A. Santini -- Executive Vice President and Chief Commercial Officer

You bet.

Operator

(Operator Instructions). Our next question comes from line is Alan Carr of Needham.

Alan Carr -- Needham -- Analyst

Hi. Thanks for taking my questions. Well, can you comment a bit on your thoughts on the CHMP decision in the BMI of 27?

Lonnel Coats -- President and Chief Executive Officer

Thanks, Alan. I'll turn that question over to Dr. Lapuerta.

Pablo Lapuerta -- Executive Vice President and Chief Medical Officer

The patients with a BMI greater than 27, they have a greater cardiovascular risk. They tend to be on higher insulin doses. They tend to be a little bit older, and the benefit risk profile is considered generally a bit more favorable in this population because the weight loss is more important to them since they're already overweight, and to just push insulin doses even more in this population would only exacerbate the weight gain, which is a cardiovascular risk factor in this population.

So that's the -- that's really the kind of the clinical appreciation for the BMI greater than or equal to 27 being a consideration in the CHMP opinion.

Operator

Our next question comes from the line of Stephen Willey of Stifel.

Stephen Willey -- Stifel Nicolaus -- Analyst

Yeah, thanks for taking my questions. Maybe just to follow-up on that question, I know I think it was inTandem2 that median BMI in the patient population was, I believe about 28, but just curious as to kind of what proportion of the Type 1 population in Europe do you believe this BMI greater than 27 captures?

Lonnel Coats -- President and Chief Executive Officer

We don't have exact numbers and it's difficult to get exact numbers because most of the epidemiology studies really report BMI greater than 30, and not BMI greater than 27. There are a few that are reporting BMI greater than 25, but if you look at how weight has changed over time, if you look at trends in Europe, perhaps some of the best data are really from inTandem2. InTandem2 is such a broad -- with such a broad collection of sites and countries that its demographics really reflect well what's happening with Type 1 diabetes in Europe.

And in inTandem 2, there would be somewhere around 40% or so of the population.

Stephen Willey -- Stifel Nicolaus -- Analyst

Okay. Just going back to the cadence of Type 2 data disclosures, I know it was mentioned and I know it's in clinical trials and a number of these studies are going to complete during the first half of this year, I guess you talked about perhaps Sanofi's preference for disclosure at a medical meeting. I believe in their most recent earnings presentation, they were referencing 4Q19 Type 2 data disclosure, which I guess is kind of past the European diabetes meeting, which is in late September.

So just kind of wondering if you can kind of help us triangulate what Sanofi might be guiding to here, just with respect to data disclosure?

Jeffrey L. Wade -- Executive Vice President, Corporate and Administrative Affairs and Chief Financial Officer

I can't really comment on what they have in their data disclosure documents, I guess the EASD is like right at the cusp of the end of the third quarter and beginning of fourth quarter, and I do expect that some of the data, the medical meetings will probably be some of them will probably end up being in next year, in terms of the details. The expectation from our perspective and I would say that for the most part that the clinical trials will be in the second half of the year rather than in the second quarter just in terms of timing.

But for the most part, we're going to -- we'll be able to provide some color as to whether we have achieved the endpoints and but not a huge amount of detail in terms of the results, and unless it's something that's -- that we that we need to disclose from materiality perspective.

Stephen Willey -- Stifel Nicolaus -- Analyst

Understood. Can you maybe just provide a little bit of color around what this Phase 1b trial for 9211 will look like, just in terms of patient size, duration of treatment, et cetera?

Lonnel Coats -- President and Chief Executive Officer

Sure, I'll turn it over to Dr. Tyle.

Praveen Tyle -- Executive Vice President of Research and Development

Hey, Steve. Praveen here. Steve, Phase 1b trial is going to be multiple ascending dose and it will basically have several dose cohorts in parallel to what we did in Phase 1a with single ascending dose. We will monitor these patients over a period of four to six weeks and we will basically study significant amount of PK and report by the end of this year the results.

Stephen Willey -- Stifel Nicolaus -- Analyst

Got it. Just curious, I guess in the list of milestones for 2019, there was no mention of the selective SGLT1, 2761, is there any update to provide there with respect to the state of that -- of that compound?

Lonnel Coats -- President and Chief Executive Officer

Yes, Steve as we -- I think we stated on one of the other calls that one of the things we're looking to get results on is the one of the trials where there is sotagliflozin on DPP-4 with a background of metformin versus Jardiance on the background of DPP-4, and depending on what that outcome looks like, it gives us greater information as to how, perhaps we want to advance 2761 into the clinic based on that data. So once we have that, then we'll make more critical data on how we're going to advance 2761 because we see it more as an opportunity for to be in line extension or lifecycle management opportunity for the franchise.

Stephen Willey -- Stifel Nicolaus -- Analyst

Got it. And then just one last quick question, sorry. Can you just remind us if any of the outstanding debt, either the term loan or the convertible has -- had any kind of covenants with respect to the minimal cash requirements? Thank you.

Jeffrey L. Wade -- Executive Vice President, Corporate and Administrative Affairs and Chief Financial Officer

There are no covenants with respect to cash requirements.

Stephen Willey -- Stifel Nicolaus -- Analyst

Great. Thanks for taking the questions.

Operator

At this time, there appears to be no further questions. I will now turn the call back over to Mr. Coats for his closing remarks.

Lonnel Coats -- President and Chief Executive Officer

Well, thank you. One of the things I generally want to say based on the questions that are asked, I think Sanofi has done a -- from my perspective, they've done a fantastic job of developing sotagliflozin thus far for Type 2 diabetes. I think the speed by which they have operated to enroll patients and start moving these trials to completion has been quite remarkable. So to Jeff's point, our confidence about how things are going to call out this year is high because of how well they've executed. So that's just a general comment I wanted to make.

Overall, I would say, we entered into 2019 with a well-defined strategy to position the Company for future growth and to build long term sustainable value for our shareholders. And as I said before, our priorities remain centered around driving long-term value through continued execution of the XERMELO commercialization and making sotagliflozin available as quickly as possible for patients with Type 1 diabetes.

Those things are at the core of what we will continue to do in 2019. It's also important to say that we're very proud that we may have the potential to have a second compound in the market, which really is a testament to the ability of this Company to discover and to develop innovative therapies that allow us to build on the opportunity to grow our Company and to provide substantial long term value for our shareholders.

I want to thank our employees for doing such an incredible job of putting us in this position and look forward to future communications with all of you. Thank you.

Operator

Thank you, ladies and gentlemen. This does conclude today's conference call. You may now disconnect and have a wonderful day.

Duration: 43 minutes

Call participants:

Kimberly Lee -- Head of Investor Relations and Corporate Strategy

Lonnel Coats -- President and Chief Executive Officer

Alexander A. Santini -- Executive Vice President and Chief Commercial Officer

Pablo Lapuerta -- Executive Vice President and Chief Medical Officer

Jeffrey L. Wade -- Executive Vice President, Corporate and Administrative Affairs and Chief Financial Officer

Liana Moussatos -- Wedbush -- Analyst

Samantha -- Citi -- Analyst

Jessica Fye -- JP Morgan -- Analyst

Alan Carr -- Needham -- Analyst

Stephen Willey -- Stifel Nicolaus -- Analyst

Praveen Tyle -- Executive Vice President of Research and Development

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